What is CFD in forex?

Solution
CFD stands for Contracts for Differences. When you buy or sell a CFD, such as a CFD on gold, for example, you are not buying or selling the physical gold itself. Instead, you are trading a contract that enables you to make or lose money depending on how the price of actual gold moves.

CFD-Contract-For-Difference-ForexPeaceArmy.jpg


To clarify this further, let us assume you bought a CFD on gold at the price of $1300 per ounce. Then the price moved up to $1350. The difference in price here is $50, which is what you gain. If the price dropped to $1250 then the difference here is -$50, which is your loss. You make or lose money based on the difference in price, which is why those contracts are called contracts for differences.

There are CFDs on various types of...

forexinmind

Private, 1st Class
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31
CFDs create a contract between two parties speculating on the movement of an asset price. It consists of an agreement (contract) to exchange the difference in value of a particular currency, commodity share or index between the time at which a contract is opened and the time at which it is closed. The contract payout will amount to the difference in the price of the asset between the time the contract is opened and the time it is closed. If the asset rises in price, the buyer receives cash from the seller, and vice versa. There is no restriction on the entry or exit price of a CFD, no time limit is placed on when this exchange happens and no restriction is placed on buying first or selling first. CFDs are traded on leverage to give traders more trading power, flexibility and opportunities.
 

Adrian_br

Recruit
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16
CFD simply means contract for differences. Buyer and seller are agreeing upon a specific price difference to each other without having actual possession of an asset.
 

Ricardo Alex

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6
CFDs are not available in the U.S. to retail investors because of Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regulations. However, they are widely available in the U.K., Europe, and Asia.
 

AliForexTalks

Private, 1st Class
Messages
54
A contract for differences (CFD) is a financial contract that pays the differences in the settlement price between the open and closing trades. CFDs essentially allow investors to trade the direction of securities over the very short-term and are especially popular in FX and commodities products.
 

ArciM

Recruit
Messages
1
CFD means contract for difference. It is a form of trading that does not involve the ownership of any physical asset. One of the major advantages of trading CFD is the opportunity of trading with leverage
 
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